Anti-Money Laundering (AML) , Blockchain & Cryptocurrency , Cryptocurrency Fraud
Co-Founder of OneCoin Cryptocurrency Scam Pleads GuiltyInternational Fraudulent Cryptocurrency Pyramid Scheme Netted $4 Billion
A dual citizen of Sweden and the United Kingdom pleaded guilty to his role in selling the purported multibillion-dollar cryptocurrency pyramid OneCoin that netted $4 billion.
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Karl Sebastian Greenwood, 45, co-founded OneCoin, a multibillion-dollar global cryptocurrency scheme run by a self-titled "Cryptoqueen" who has been on the run from law enforcement for half a decade now. Greenwood pleaded guilty Friday in Manhattan federal court to wire fraud and money laundering charges in connection with his participation in the massive fraud scheme.
Greenwood now faces 20 years in prison for committing wire fraud and one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison.
His sentencing is scheduled for April 5, 2023, before District Judge Edgardo Ramos, who accepted Greenwood's guilty plea.
Accused of money laundering, Greenwood was arrested in 2018 by police in Thailand, acting on an international arrest warrant issued by the U.S., as well as an Interpol red notice, and was extradited to the U.S (see: OneCoin Cryptocurrency Scam Suspect Faces Extradition to US).
The scam's alleged mastermind was Bulgarian national Ruja Ignatova, 42, whose preferred moniker was "Cryptoqueen." Ignatova has been on the lam from law enforcement since 2017. Interest in the case and her potential whereabouts remains high.
U.S. Attorney Damian Williams says that as a founder and leader of OneCoin, Greenwood operated one of the largest international fraud schemes ever perpetrated. He and his co-conspirators, including fugitive Ignatova, conned unsuspecting victims out of billions of dollars, claiming that OneCoin would be the "bitcoin killer."
"In fact, OneCoins were entirely worthless. Greenwood's lies were designed with one goal - to get everyday people all over the world to part with their hard-earned money, real money, and to line his own pockets to the tune of hundreds of millions of dollars," Williams says.
Founded in 2014, OneCoin, which the U.S. Department of Justice called an "international pyramid scheme," is described as one of the biggest scams in history. It amassed an estimated $4 billion from investors.
OneCoin operated as a multilevel marketing scheme, also known as an MLM network, in which the members received commissions for recruiting others to purchase cryptocurrency packages. OneCoin's promotional materials say that over 3 million people invested in fraudulent cryptocurrency packages, according to the Justice Department.
"OneCoin records show that, between the fourth quarter of 2014 and the fourth quarter of 2016 alone, OneCoin generated €4.037 billion ($4.27 billion) in sales revenue and earned "profits" of €2.735 billion ($2.89 billion)," the DOJ says.
Greenwood was the leader of the MLM network, and the DOJ calls him the "global master distributor" for marketing and selling the fraudulent cryptocurrency. DOJ says that in a video posted online, Ignatova attributed to Greenwood the idea of marketing and selling OneCoin through an MLM network structure.
"Greenwood earned approximately €20 million a month in his role as the top MLM distributor of OneCoin," the DOJ says.
According to the Justice Department, Greenwood and Ignatova conceived of and built the business to use it to defraud investors. Justice says that in the summer of 2014, they both developed the concept for OneCoin and referred to it in email correspondence as "trashy coin."
'Cryptoqueen' Is Missing
In May, Europol added Ignatova to its most wanted fugitives list, offering a reward of up to $5,000 for information that leads to her arrest. Ignatova "is suspected of having, as the driving force and intellectual inventor of the alleged cryptocurrency 'OneCoin,' induced investors all over the world to invest in this actually worthless 'currency,'" Europol says.
In June, the FBI followed suit and added her to the Ten Most Wanted Fugitives list in June 2022, offering a reward of up to $100,000 for information leading to her arrest.
Ignatova was charged by U.S. prosecutors on Oct. 12, 2017. Thirteen days later, possibly after she was tipped off that she was under investigation, she traveled from Sofia, Bulgaria, to Athens, Greece. Her whereabouts have remained unknown since then.
After Ignatova fled, her brother, Konstantin Ignatova, a co-founder, became chief executive of OneCoin. He was arrested in 2019 at Los Angeles International Airport and pleaded guilty later that year to money laundering and fraud.
Beyond OneCoin lacking an actual blockchain, the DOJ said when announcing his arrest that "by approximately March 2015, Ignatova and her co-founder had started allocating to OneCoin members coins that did not even exist in OneCoin's purported private blockchain, referring to those coins as 'fake coins.'"
Another defendant in the case is Mark S. Scott, a former partner at the law firm Locke Lord LLP. The DOJ has accused him of laundering $400 million on behalf of OneCoin "through a series of purported investment funds holding bank accounts at financial institutions in the Cayman Islands and the Republic of Ireland, among other locations." He was arrested in Barnstable, Massachusetts, on Sept. 5, 2018.